Three investment themes for 2023
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The world is not on track to achieve Zero Hunger by 2030. After decades of steady decline, the number of people who were going hungry began to slowly increase again in 2014*. Just prior to the pandemic, the number had risen to 650 million globally – a number that, due to disruptions in food supply chains, income losses and widening social inequalities rose to between 720 and 811 million in 2020*. In addition, 2.37 billion people, or one in three of the global population, were affected by moderate or severe food insecurity the same year*. Simply put, urgent short-term actions are needed to avert rising hunger and a transformation of food systems is required to achieve a healthy and sustainable food future for all.
“If we can conquer space, we can conquer childhood hunger.” — Buzz Aldrin, astronaut
The aim of the UN’s Sustainable Development Goal 2 is to end hunger, achieve food security and improved nutrition and promote sustainable agriculture. The related eight targets to UN SDG 2 aim to end all forms of malnutrition, with a particular focus on stunting, childhood wasting and the nutritional needs of adolescent girls, pregnant and lactating women, and older persons.
Food and agriculture have long been the heart of civilisation. Yet, agriculture faces multiple challenges: a growing world population, a smaller rural labour force, soil degradation, climate change and water scarcity to name a few.
“One of the biggest challenges that the world must address, is how to (sustainably) increase food production in order to meet the needs of a global population of 10 billion by 2050,” said Thomas Pratchett, investment specialist of the Baillie Gifford Japan Trust.
A growing population puts pressure on our food systems, but achieving food security goes beyond the eradication of hunger. Increasing agricultural productivity and sustainable food production are crucial to help alleviate hunger. In addition, many of the world’s hungry produce food for themselves. Strengthening the ability of small farmers is critical to reversing the trend in rising hunger and reducing the number of people living in extreme poverty.
Technological advancements have occurred in every industry across the world and agriculture is no exception. Nowadays, technology is significantly helping growers and farmers in several ways, including precise forecasting, data-driven decision making, and more.
Tom Walker, manager of Schroder Digital Infrastructure fund, told me how every element of the digitisation of the food industry will place more demand on digital infrastructure. For example, “Digital infrastructure is enabling the collection of data, which in turn optimises crop yields and helps to reduce hunger. This will have a radical effect on factory production and distribution,” he said.
“Drones can also give farmers information as to which parts of fields might need water or fertiliser, optimising efficiency, while data is being used to automate processes and reduce costs, all the time ensuring fresh food quality is maintained.”
Undoubtedly, technology is significantly altering the way we live and work. The adoption of various technologies in agriculture has brought several disruptions in the industry.
To accomplish these goals, investment into agricultural and sustainable food production needs to be achieved. In 2018, the World Government Summit launched a report called Agriculture 4.0 – The Future Of Farming Technology, in collaboration with Oliver Wyman, looking at the impact that advanced technologies, particularly artificial intelligence, will have on planning and farming operations.
Chris Ford, manager of Sanlam Artificial Intelligence, told us recently about John Deere which is transforming to a Smart Industrial Company. The new systems cover solutions from post-harvest up to the next harvest by unlocking the economic and ecological benefits and eliminating waste and inefficiencies. According to Deere & Co, “Farmers around the world are faced by major challenges in terms of conservation of resources, profitability and environmental protection. Digitalisation is an important enabler to solve these challenges.”
Learn more: Investing in agriculture
Zero hunger recognises the links between supporting sustainable agriculture, empowering small farmers, promoting gender equality (SDG 5), ending rural poverty (SDG 1), ensuring healthy lifestyles (SDG 3), tackling climate change (SDG 13), and other issues. According to Schroders, agriculture and water (SDG 6) go hand in hand. Agriculture uses 65%** of the world’s fresh water, but almost half of it is currently wasted. So, making our food and water systems sustainable requires a holistic approach.
*Source: UN Sustainable Development Goals, 2021 Report
**Source: Schroders: Why agriculture holds the key to tackling water waste, 21 March 2022